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 | | | 6 Pot Stocks at Risk of Being Delisted | | Matthew Carr | Chief Trends Strategist | The Oxford Club | | | | | COVID-19 whacking the broader markets was only one part of the story.
As the Dow Jones Industrial Average, Nasdaq and S&P 500 tumbled more than 30% from all-time highs to multiyear lows, individual sectors cratered even harder.
One of those sectors was cannabis.
The Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) has been having a wild 2020. As the rest of the market stalled at the start of the year, the pot stock index rocketed higher. Then, when everything was mauled by the bear, the ETF fell almost 50% at its lowest level... The Marijuana Index ETF found a bottom before the Dow, Nasdaq or S&P.
Due to the bear market, there are some major concerns lurking for some of the cannabis industry's most well-known producers.
And a few of these have started a countdown clock no investor wants to see.
Final Countdown for These Stocks?
During the past few years, we witnessed something almost unthinkable - marijuana companies listed on major U.S. exchanges.
A decade ago, this wasn't even on anyone's radar...
Especially with cannabis still illegal at the federal level in the U.S.
But as other countries, and many U.S. states, began legalizing adult-use and medical marijuana, we saw evolving perspectives from American exchanges.
First it was Cronos Group (Nasdaq: CRON). Then it was Canopy Growth Corp. (NYSE: CGC). Soon, nearly a dozen others followed.
This was a great legitimizing of the industry. And pot stock shares soared, making these companies worth tens of billions of dollars.
But the damage done by this bear market could have investors witnessing a great reversal - marijuana companies being delisted.
There are plenty of reasons a company could see its stock delisted. But the most common is share price. | | | The Nasdaq and New York Stock Exchange (NYSE) require the average closing price of a listed company's common shares to be at least $1 over a 30-day consecutive period.
If shares don't meet that requirement, the exchange can issue a deficiency notice. Companies will then have 180 days to bring their stocks back up to $1.
This is why you can't buy penny stocks on major exchanges.
And with the broad-based pullback, several cannabis companies are now at risk of violating this rule.
In fact, there are six pot stocks I think investors need to keep a watchful eye on, as their average closing price over the past month has fallen near or below that $1 threshold... Sundial Growers (Nasdaq: SNDL) investors have the least to be concerned about at the moment. Shares have averaged a closing price of $1.146 over the past month. Though they did set a new 52-week low of $0.57 on March 18. After spending 11 consecutive days without closing above that all-important $1 level, they rebounded to a near-term high of $1.16.
But on Monday, Sundial shares couldn't hold that ground.
Shares of Aurora Cannabis (NYSE: ACB) hit a 52-week low of $0.60 on March 18. They spent 14 consecutive days in March without closing above the $1 threshold.
But they did bounce as high as $1.13 on March 27.
Though, like Sundial, they tumbled below $1, starting a new countdown.
Hexo Corp. (NYSE: HEXO) shares also set a 52-week low of $0.346 on March 18. They spent 13 consecutive trading sessions without closing above that $1 mark.
But as we saw with Aurora and Sundial, shares did go on a tear, more than tripling to $1.23 on Friday.
Of course, that high was short-lived.
These three companies rallied hard and reset the clock. But another extended move lower could put them back in jeopardy.
It's the other three on the list that investors need to be most concerned about.
On High Alert
Shares of 22nd Century Group (NYSE: XXII) have averaged a little less than $0.82 over the last 30 sessions.
The biotech company provides technology that can increase or decrease the amount of cannabinoids in cannabis and hemp plants. Shares set a 52-week low of $0.60 on March 12 and have currently spent 28 consecutive sessions without closing or trading above $1.
It's rife for a listing notice from the NYSE in the coming weeks.
The poster child for some of the most destructive moves in the cannabis market in 2019 is CannTrust Holdings (NYSE: CTST).
Shares of the disgraced Canadian producer tumbled to a new 52-week low of $0.38 on March 18.
Like many cannabis shares, these have more than doubled in recent days to a high of $0.869. But shares have traded below $1 since February 6. That's a full 36 consecutive days below that key level.
CannTrust has already received a listing notice from the NYSE. And it's at serious risk of being delisted by the exchange.
India Globalization Capital (NYSE: IGC) is in even more dire straits.
Shares of the CBD beverage company haven't closed above the $1 threshold since October 22, 2019.
In 2018, the NYSE suspended trading of these shares for this very same reason. The company eventually won an appeal to have them relisted.
But here we are once again.
Unfortunately, these aren't the only ones. If there's another long-term pullback, these three companies are also worth keeping an eye on... - Neptune Wellness (Nasdaq: NEPT) shares trade around $1.20 but recently hit a 52-week low of $0.96.
- New Age Beverages Corp. (Nasdaq: NBEV) shares currently trade around $1.36 but recently hit a 52-week low of $0.98.
- OrganiGram Holdings (Nasdaq: OGI) shares currently trade around $2 but recently hit a 52-week low of $1.41.
Pot stocks trading on the NYSE and Nasdaq are something many investors thought they'd never see.
We watched history being made.
But one of COVID-19's many victims might be cannabis companies. Already, three are facing what seems inevitable... with possibly more on the horizon.
Here's to high returns,
Matthew | | | | |  | | | | | |  |  | | | | Matthew Carr | March 30, 2020 A market crash is usually the time to go shopping for discounts, but be wary of these five stocks right now. Read More | | | | |  | | | | Jody Chudley | March 26, 2020 Here's why you shouldn't worry about your investment portfolio during this market crash. Read More | | | | |  | | | | David Fessler | March 25, 2020 Between COVID-19 and the oil price war, crude is in a state of major oversupply and reduced demand. Read More | | | | | | | | |
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